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Aviation History
1961
1961 - 1386.PDF
490 FLIGHT, 21 September 1961 Air Freight and British Trade By KENNETH R. SEALY and PETER C. L. HERDSON THIS is the second instalment of a summary, specially prepared for "Flight" by the authors, of the recent European air freight study made in collaboration with Hawker Siddeley Aviation by the London School of Economics. Part I appeared on pages 458-460 of "Flight" last week. THIS section of our study deals with air freight as part of thedistribution process; and in order to meet the requirements ofdetail it is restricted to the export of machinery to Europe.Included under this heading are vehicles, instruments and "mis- cellaneous metal manufactures" (e.g., cutlery and tools). The datacover that part of distribution which follows despatch from the factory or warehouse to the customer. From the manufacturer'spoint of view the "consumer" may be an agent in the country of destination, or he may be the final customer. The tracking downof the individual customers of agents was not always possible in the time available. Nevertheless, many problems occur betweenthe arrival of the goods at the port or airport of destination and the final consumer, particularly where the latter is not situated closeto the port. The added transport necessary for final distribution may demand well-packed goods, and thus nullify any savings inthis direction made possible by the use of air freight. Cases of this kind were found. We are primarily concerned with total distribution costs ratherthan with transport costs alone, and some definition seems warran- ted. Direct elements of cost include transport costs for all journeys,including (e.g.) movement from factory to packing centre and to the port or airport of origin. In addition, packing costs, insurance,documentation, dock dues and Customs must be added. Indirectly may be added the saving of interest made possible by the smallerquantity of capital in transit when air transport is employed. An allowance for the latter has been made, using an interest rate of5 per cent per annum. The term "consignment" is used to denote a typical consignmentregularly shipped by the firm concerned, based in most cases on data for the past three years at least. A final sample of 100 firmswas used, from which some 150 "type" consignments could be documented in sufficient detail. On an annual basis these con-signments account for 5,000 shipments (approximately equal to a 2 per cent sample of BEA's annual consignments in machinery).In selection no attention was paid to transport methods used, but since machinery was chosen because of its importance to air freight,we were reasonably certain of getting data for air freight as well as for surface transport. In the event, air freight was used for 35type-consignments, equal to about 1,200 annual movements. In summary, we are dealing with regular shipments, for despite thefact that emergency shipments probably account for about 20 per cent of current traffic, it is upon a firmer basis of regular usagethat the future of air freight must rest. We may here digress a little to note one or two points con-cerning "emergency" movements, lest anyone should think that they will die out in the future. The term "emergency" is not a veryprecise one, since it embraces not only true emergency consignments like the proverbial ship's propeller—but a much wider element ofirregular shipment involving spare parts, tools and stock that are premeditated by firms and are therefore not emergency in character.The distinction is between "episodic" and "periodic" movement, and the boundary must necessarily be somewhat arbitrary. "Epi-sodic" implies a lack of regularity; and, where no recurring pattern of shipment over a number of years is found, we have classed theconsignment as emergency and omitted it. The whole situation is dynamic—e.g., a new product may be shipped irregularly at first,and regularly later as the markets become assured. Thus, the emergency or episodic shipment has a rightful place in the hierarchy. Part 2 Fig 4. Ability of exist- ing freight aircraft to handle bulky con- signments 90 80 70 60 - . 72 5 % - 10 7 V 9 6%/ / b (BEA) i — 3-6%^ ' ^VISCOUN" • -it 60 100 150 LB/SQ FT Consignment Characteristics Forwarding agents and manu-facturers pointed out the inability of existing freighter aircraft t> carry bulky loads, especially in view of the lack of suitable handlingequipment. We found, for example, that of the type-consignments analysed 19 per cent were too bulky to be loaded into the Viscount802 freighter. The average density of the air consignments in our survey was22.91b/cu ft, while 25 per cent of them were over 1,2001b in gross weight, with an average density of 34.81b/cu ft. The bearing weightsare given in Fig 4. When packed for air as opposed to surface transport, all thetype-consignments in our analysis showed an average reduction in total weight of 14 per cent. For those which are currently despatchedby air the figure was 29 per cent. Similarly, packing cost reductions would be 25 per cent and 55 per cent respectively. Some 20 percent of the firms in the survey found no gain in packing when despatching goods by air. This is particularly true of the textiletrade. The export values of the consignments, given in pence per lb.are shown in Table 5. If the figures are made more extreme, by taking out consignments worth more than 1,000pence/lb, then only5 per cent of the surface shipments would be included, whereas 20 per cent of the air consignments fall into this category. Mostconsignments are valued at 101-240 pence/lb and it is interesting to note that air freight holds its own despite the relatively low figure. Attempts have sometimes been made to use the value of a com-modity asa means of approximating the level of transport costs itcan stand. A figure of 5 per cent of the value is usually taken as a workinglimit. We calculated both the transport costs and the total distribu- tion costs of our consignments as percentages of their export value.For all consignments the range was 0.2-6.2 per cent for transport costs, and 0.4-15 per cent for total distribution costs. For airfreight shipments alone, the figures were 0.5-6.2 per cent and 0.9- 7.4 per cent respectively. The average figures for all consignmentsworked out at 1.7 per cent for transport costs, and 4.5 per cent for total distribution costs. In so far as any average is usable, a figurebelow 5 per cent would seem more appropriate. Cost Analysis The relative importance of the various elementsof total distribution costs varies with the mode of transport. For surface transport, the two big items are FC, the cost of the mainjourney, and PC, packing cost (these and other abbreviations are set out at the foot of page 491). Incidental transport costs—e.g.,cost of transport to the port—may represent up to 16 per cent of TDC. Other elements rarely reach these levels, but both insuranceand documentation costs rep^senting 20 per cent were recorded. In the case of air freight, the great contrast lies in the much smallerfigures for PC and the relatively higher place occupied by incidental transport costs. Although seaports may be widely spaced, airportshandling freight on any scale are even more sporadic in occurrence: indeed, in many instances, London Heathrow was the only suitableexample. Thus some firms in the Midlands and the North use London, thereby adding not only an extra ten hours' journey time,but incurring costs representing 10 per cent of the total. The main 100 80 60 Figs 5a and 5b. Relationship between freight cost (FC) and packing cost (PC) expressed as percentages of total distribution costs (TDC) WTS 0-100 kg 100 80 60 c 1,' * SURFACE SHIPMENTS AIR FREIGHT SHIPMENTS WTS 101- 1000 kg I ABOVE • • •
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